This post marks the first step of our nine steps on buying a franchise. Assuming you have an open mind on the particular type of franchised business you would like to operate, the two key considerations in buying a franchise are:
- What size of investment can you afford?
- What are your criteria and industry/area of interest?
With a wide range of franchised systems on offer, the prospective franchisee is faced with a seemingly endless range of opportunities. To start with you should be comparing those businesses in your price range regardless of industry - you might surprise yourself by finding a business you'd never considered is actually an ideal one for you.
If you’ve already culled out those systems which don’t interest you, those for which you are not suited or those that demand operating constraints you are unwilling to meet, the first step in filtering this range of potential opportunities is to be realistic about the amount of money you are prepared to commit to the business.
Here, the smart prospective franchisee will determine what they can afford and then commit to no more than that – just like the rules at an auction, set your limit and stick to it.
Other criteria to consider include:
- Where is the investment funding come from?
- What is the debt and the cost of debt service and principal repayment?
- How much income do you expect in return for your investment?
- In what geographic area should the franchise be located?
- How many days will your franchise trade?
- How many staff are you prepared to employ and manage every week?
- How many days/hours are you prepared to commit per week?
- How many years are you expecting to be involved?
- Do you have the support of your spouse or partner and what role, if any, will they have in the operation of the franchise?
Once you've looked at that criteria, you should continue your buying a franchise journey.